Global Economics

EU Scales Back Aviation Emissions Plan

December 19, 2006

The European Commission is considering a two-year grace period for foreign airlines before they're required to participate in the carbon reduction scheme

The European Commission is on Wednesday set to propose that all airlines using European airports be required to take part in its carbon-reducing scheme – although international flights will be allowed some extra time to take part.

According to a draft proposal seen by EUobserver, the scheme will cover "all flights arriving at or departing from an airport in the Community as of 1 January 2012."

However, according to the Financial Times, after further discussions on Monday, foreign airlines may get two year's grace meaning they will not have to be a part of the scheme until 2013.

Intra-European flights by contrast will be covered by the scheme from the beginning of 2011.

The extra years given for international flights is being seen as a conciliatory measure towards the US which had raised the prospect of legal action.

The draft plan also suggests that Brussels will come with a new proposal covering nitrogen oxide emissions by the end of 2008.

The current proposal will cover carbon dioxide emissions only and is an extension of the EU's Emissions Trading Scheme already in place since the beginning of last year.

Under this scheme industry is given a certain amount of pollution credits. If they exceed their limit, they have to buy credits from other companies - resulting in a carbon market.

The commission has been threatening to include airlines - the fastest-growing carbons emissions source - in the scheme for several months.

The draft proposal says that airlines will be able to buy pollution allowances "from other sectors in the [EU] community scheme for use to cover their emissions." The scheme is also to cover Norway, Iceland and Liechtenstein - the three members of the European Economic Area (EEA).

CRITICISM ON BRUSSELS

But the commission's ideas are already coming under fire. Leading environment group WWF and the UK's Institute for Public Policy Research (IPPR) have suggested that the costs of the scheme will be felt only by consumers and will not greatly affect airlines.

The IPPR said on Monday that including airlines in the scheme is a "step in the right direction," but it added that "the EU should not repeat the mistake it made with the energy sector and give up the aviation industry free emissions credits, handing the airlines a windfall of up to £pound;2.7bn."

The commission's proposal however suggests that "a fixed percentage of the total quantity of allowances will be allocated free of charge on the basis of a benchmark."

Meanwhile, according to the BBC, the WWF has suggested the airline industry could make up to £pound;3.5 billion on the scheme.

For its part, the airline industry favours the scheme over direct taxes.

"An [emissions trading scheme], if it is designed appropriately, is a precision tool," said Ulrich Schulte-Strathaus, Secretary General of the Association of European Airlines.

The commission's announcement on Wednesday is part of an overall tightening up of its pollution-cutting proposals for the bloc after it became clear that member states were being too lenient towards industry and granting too many pollution allowances.

Under the Kyoto climate change treaty, the EU has committed itself to reducing carbon emissions to 8 percent of 1990s level by 2012, a commitment that is currently off track.